The latest question, did his lieutenant governor threaten to withhold Sandy funds as retribution?

Plus, an encouraging sign -- new video of an American hostage speaking out from North Korea.

Is he on the verge of being freed?

And honoring Dr. Martin Luther King, Jr.. -- President Obama participates in a day of service here in Washington and opens up about his race in a candid new interview.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

It's now turning into a a case of she said/she said. Chris Christie's lieutenant governor, Kim Guadagno, is, for the first time today, fiercely denying an allegation made here on CNN by the Hoboken mayor, Dawn Zimmer, that she threatened to withhold Sandy funds on the New Jersey governor's behalf as retribution for failing to support a real estate project.

It's just the latest in a widening string of scandals plaguing Governor Christie as he attempts to launch a second term and a potential presidential bid for 2016.

CNN's Erin McPike is joining us from Trenton, where the governor is scheduled to be sworn in tomorrow for his second term -- Erin, what's the latest?

ERIN MCPIKE, CNN CORRESPONDENT: Wolf, today Chris Christie's administration got very aggressive in fighting back against these accusations that Dawn Zimmer has made. They even held a conference call describing just how much they have done for Hoboken. (BEGIN VIDEOTAPE)

MCPIKE (voice-over): Chris Christie's lieutenant governor spent the day defending herself and her boss against growing allegations of political retribution that now stretch far beyond traffic jams in Fort Lee.

LT. GOV. KIM GUADAGNO (R), NEW JERSEY: The suggestion that anyone would hold back Sandy relief funds for any reason is wholly and completely false.

MCPIKE: Guadagno was playing defense after being accused by the Democratic mayor of Hoboken, Dawn Zimmer, of intimidation in the aftermath of Super Storm Sandy.

In an interview Sunday with CNN's Candy Crowley, Zimmer said she was told Hoboken would receive millions of dollars in federal storm recovery only if she would help push through a real estate project being developed in her city by the Rockefeller Group, a developer with ties to the governor and his allies.

MAYOR DAWN ZIMMER (D), HOBOKEN, NEW JERSEY: The lieutenant governor pulled me aside and she said the Rock -- you know, essentially, you've got to move forward with the Rockefeller project. This is -- this project is really important to the governor.

MCPIKE: As evidence, Zimmer points to journal entries she says she wrote about the confrontation that day -- journals she now says she turned over to the U.S. attorney's office probing the Christie scandal.

Today, the lieutenant governor said she took the accusations personally.

MCPIKE: Meantime, in the first new interview since the wide-ranging press conference two weeks ago, Christie told yahoo.com he plans to learn from the ordeal.

Despite the political fallout at home, Christie spent much of his weekend in Florida, raising money for that state's Republican governor, talking to wealthy conservatives many believe could be potential donors if he runs for president in 2016 and telling them not to worry about that campaign yet.

But in that new online interview, Christie gave a much more coy response about a potential run, saying he is, quote, "readier now" than he was two years ago.

UNIDENTIFIED FEMALE: This is a very challenging time for the governor. He's getting a lot of national attention now. I think his strong leadership and his response to these challenges is going to be very important going forward.

(END VIDEO TAPE)

MCPIKE: Now, a new Pew Research Center poll out today does show that this is taking something of a toll on Chris Christie. It shows that his unfavorable rating has jumped from 17 percent last year to 34 percent now. And, also, 58 percent of respondents who say they've heard of the bridge controversy don't believe he didn't know about it -- Wolf.

BLITZER: Erin McPike in Trenton, thanks.

Let's bring in Democratic Congressman Frank Pallone of New Jersey.

He's joining us from Union Beach right now.

Congressman, thanks very much for coming in.

REP. FRANK PALLONE (D), NEW JERSEY: Thank you, Wolf.

BLITZER: All right, so this is a she said versus a she said -- she said, she said.

Who do you believe?

Do you believe the mayor of Hoboken or the lieutenant governor of your state?

PALLONE: Well, Wolf, I wasn't party to the conversations. But I do think that the allegations of the mayor of Hoboken are very serious and the U.S. attorney needs to look into it.

And as I've said to you in the past, I mean there's been so many allegations now about, you know, threats and bullying by the Christie administration, you know, it does seem that that's the culture. And I think that this whole idea of abuse of power, you know, has to be looked into, both by these legislative committees and by the U.S. attorney's office. You know, I believe that what happened with the TV commercials that -- where the governor said, you know, or his administration said you, you know, you put me in the TV ads and I'll take the higher bidder, essentially, which is what "The Asbury Park Press" investigated, is just another example of this abuse of power.

And these are serious allegations that have to be looked into.

BLITZER: Do you think that both of these women, the mayor of Hoboken, the lieutenant governor of New Jersey, should be brought in for questioning and questioned under oath, with lie detectors, if you will?

Is that necessary?

PALLONE: Well, both of them don't seem to have a problem in testifying or cooperating thoroughly with the authorities. So I think, you know, that is what's going to happen. They're both going to be asked and the U.S. attorney and the legislative committees will have to look into it and determine what happened. And there may be additional facts that come forward, you know, as we proceed. BLITZER: Do you think it could have been just a simple misunderstanding in that parking lot?

Maybe the lieutenant governor said to the mayor, you know, we really want you to go ahead and approve this development project that's going to be taking place in Hoboken and there wasn't a direct linkage to receiving more Super Storm Sandy funds?

Do you think there may have simply been a misunderstanding between these two women, as far as communicating what was going on?

PALLONE: No. I think that the mayor of Hoboken has been very clear about what she said she heard. I saw her on -- up with Steve Kornacki, you know, the morning -- Saturday morning, when she said this. And she was pretty clear that there was a direct link being made by the Christie administration. I don't think there's any doubt of what she said that she heard and what her allegations are.

BLITZER: By the way, what's the status of that project, that huge development project that they were talking about?

PALLONE: Again, I don't know. I just know that what the mayor of Hoboken said was that, you know, it was still outstanding. But I don't know any details about it, Wolf.

BLITZER: You were on "NEW DAY" earlier today, on CNN. There was a nice interview with you there. And you threw out the so-called I word, impeachment.

Explain precisely where you see this unfolding -- this investigation of the governor?

PALLONE: Well, I want to stress that, you know, I don't believe that when you -- if, in fact, it's true that the Christie administration was linking this development project to Sandy aid, that's a serious charge and something that I think would be illegal and would result in, you know, impeachment or resignation.

I want to really correct this notion out there that somehow, you know, this is business as usual in New Jersey or, you know, amongst politicians in general.

We don't trade, you know, approval of developments for Sandy aid. That's wrong. I mean I worked very hard to get this money for Sandy relief. And I'm in Union Beach. And we're here today working to try to rebuild homes that still haven't been rebuilt and a lot of the people still haven't gotten their checks to rebuild their home or to raze their home.

So, you know, this notion that somehow, you know, you're going to link Sandy aid to development or to TV ads or whatever, it's just not right. And that's not the way it is. And that's not the way it should be. And, you know, if nothing else comes out of this, it prevents future politicians from making those kinds of links, if they occurred.

BLITZER: If they occurred.

A spokesman for the governor, Colin Reed, put out a statement saying -- and I'll put it up on the screen. "it's very clear partisan politics are at play here, as Democratic mayors with a political ax to grind come out of the woodwork and try to get their faces on television."

I want you to react to that accusation that Democrats -- and you're a Democrat -- are simply piling on against this Republican governor of New Jersey who was recently re-elected in a significant -- with a significant majority.

PALLONE: Well, remember that the mayor of Hoboken -- in New Jersey, we have these May nonpartisan elections. She may be a registered Democrat, but she doesn't run as a Democrat. She runs in a nonpartisan election. And, you know, she was -- I know she didn't endorse the governor, but, you know, she's been -- she's praised him when she thought it was necessary.

So I think it would be wrong, you know, to say that those who are out there and speaking out are just, you know, partisans. And certainly, you know, the case with the mayor of Hoboken, she doesn't even run as a Democrat.

So I think it's very unfair to say that.

BLITZER: Hey, Congressman...

PALLONE: Thank you, Wolf.

BLITZER: -- thanks very much.

PALLONE: Thank you.

BLITZER: We're going to have a lot more coming up on this story here in THE SITUATION ROOM.

Also, please be sure to tune in later tonight, Anderson Cooper at 10:00 p.m. Eastern. He's going to have a special report, "Chris Christie and the Bridge Gate Scandal." That's at 10:00 p.m. Eastern, only here on CNN.

When we come back, we're also following a major international story that's developing this hour. Some sanctions being lifted as an interim nuclear deal with Iran begins to take effect.

Will it hold?

Plus, new video coming into THE SITUATION ROOM of an American hostage, Kenneth Bae, speaking out from North Korea.

Is it an encouraging sign he soon could be a free man?

(COMMERCIAL BREAK)

BLITZER: We're following two major international stories this hour. After a 24 hour kerfuffle, the Syrian peace talks are now back on track. The United Nations has just withdrawn its invitation to Iran less than a day after the secretary-general, Ban Ki-moon, announced Tehran would participate.

Syrian opposition had threatened to pull out of the Geneva talks, angry over Iran's role supporting the Bashar Al-Assad regime in Damascus.

The opposition is now praising the United Nations for doing the, quote, "right thing."

And here in Washington, CNN foreign affairs reporter, Elise Labott -- Fred, you're there on the ground in Damascus.

How is the Syrian government reacting to this diplomatic uproar? First, Iran was participating in the peace talks. Now, they've been effectively kicked out. What are they saying in Damascus?

FREDERIK PLEITGEN, CNN CORRESPONDENT: Wolf, the Syrians have always said that it's important for the Iranians to be there. They've always lobbied for the Iranians to be there to them. They've always said this conference is not about creating some sort of transitional body, but to them, it is about fighting what they call terrorism which is, of course, what they call all groups that are fighting against the government.

I want to listen real quick to what Bashar al-Assad had to say in an interview he gave on Sunday to the AFP.

(BEGIN VIDEO CLIP)

PRES. BASHAR AL-ASSAD, SYRIA (through translator): Any political resolution that comes out of Geneva talks without considering fighting terrorism will have no value. There cannot be political work while terrorism is widely spread, not only in Syria but also in neighboring countries.

(END VIDEO CLIP)

PLEITGEN: Now, Wolf, another really interesting note from that interview is that Bashar al-Assad not only said that he doesn't think that the conference should be about creating a transitional body, but he also said that he's seriously considering running for another term so possibly staying in the office for years to come. That, of course, is something that could also derail these peace talks before they ever begin, and of course, they were fragile to begin with -- Wolf.

BLITZER: All right. Hold on for a moment, Fred. Elise is here as well. Elise. What was the thinking here? One day, the Iranians are invited to these peace talks in Geneva, the next day the invitation is rescinded. What's going on?

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER: Well, it's all the drama you would expect from an exclusive event of this nature, but the drama is double because what happened was the United Nations invited Iran over the objections of the U.S. Once they were invited, Iran kind of pulled a fast one and said we're not here for a political transition. We're not signing up to any of the principles. The U.S. threatened not to come.

The opposition threatened not to come, and it really forced the U.N. to rescind. So, Iran won't be there, Wolf, but they're going to be the elephant in the room because Iran is the key backer of the Syrian regime. It has intelligence operatives on the ground. It has fighters on the ground. And it's a party to the fighting.

So, it's hard to see where this is a peace conference without Iran and when you look now at the state of the opposition, Assad, as Fred just said, is talking about stepping down but in fact staying in power. Geneva is really a train wreck waiting to happen.

BLITZER: Yes. I'm surprised that it's even taking place. But let me bring Nick Paton Walsh into this. Nic, you've covered this story for a long time. You're in Beirut which is certainly feeling the effects of what's going on in that civil the war in Syria. Does anyone in the region really think that Bashar al-Assad is going to walk away and give up and accept some sort of transitional government move away from what he's done?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: He's made absolutely clear that's not on his agenda. The question mark is exactly how much the Moscow and Tehran see him staying in power as their ultimate goal.

Surely, they want the administration in Damascus as friendly (ph), their strategic (ph) goals, but perhaps, some optimists of Geneva, too, think maybe by getting them in the same place minus Iran now, as Elise mentioned, with the exact influence on the outside, perhaps that might remind Damascus, in fact, there are larger issues at stake here.

But very, very quickly, despite that kind of southern (INAUDIBLE) people had in getting the Syrian opposition to attend, very quickly, people are going to start realizing the major problem here, the opposition and the regime pulls apart and that key issue of transition, they can have their first day of international groups getting, perhaps in media rate (ph) in the situation for millions of Syrians suffering inside that country right now, perhaps.

Sooner or later, they're going to realize that pulls apart on that, the transitional governments, the key -- that's what everyone say they are there to talk about, it's going to be pretty short lived if Bashar al Assad simply refuses to even go there -- Wolf.

BLITZER: Yes. Let me go back to Damascus. Fred Pleitgen is on the ground for us there. Fred, CNN has now received this report. Our Christiane Amanpour received it. A team of internationally known renowned war crime prosecutors, forensic experts, they've looked at photographs, and they say they have found what they called direct evidence of systematic torture and killing of prisoners in Syria by the Syrian regime, of President Bashar al-Assad. The photos are horrendous, if you look at them. Fred, what's the reaction, if any, from Damascus to these latest assertions?

PLEITGEN: Wolf, we haven't been able to get any reaction to the Syrian government yet. One of the reasons actually for that is that most people who talk to international media here in Damascus are actually either on their way to Geneva or already in Geneva. So, it's been difficult to get any sort of reaction at this point in time.

But look, one of the things I will say is that there are a lot of people here in the government controlled area that support Bashar al- Assad. They're afraid of what will happen after Bashar al-Assad. But one of the things that you notice time and again when you get here on the ground is that people who are against Assad and people who are for Assad always tell you that the detention system (ph) here in this country is absolutely awful.

There are people who disappear here on a regular basis, people who are against the government, people who support government, and they usually get out of jail usually without looking a lot worse than they did when they come in. So, one of the things that we hear from people here on the ground is that these photos that we're seeing on CNN are absolutely awful.

I don't think that they necessarily surprise people here in the country because people, as I said, who are for Assad or against Assad realize that -- this country is one. It's a nightmare (INAUDIBLE) to say the least, Wolf.

BLITZER: Fred Pleitgen in Damascus, Nick Paton Walsh in Beirut, Elise Labott here in Washington. If you want to see these horrendous photographs, go to CNN.com. The pictures are really, really awful.

Iran has stopped enriching high-level uranium. The International Atomic Energy Agency says Iran has implemented the first steps of the interim nuclear deal it reached with the United States and other world powers with the first steps comes big relief as certain sanctions are being suspended. CNNs chief national security correspondent, Jim Sciutto, is joining us now with the very latest. What else is going on, Jim?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, Wolf, I mean, for all of the trouble in Geneva, this was actually a good day for the nuclear green. The IAEA issuing a report confirming that Iran is meeting its side of the deal. That means ceasing enrichment of uranium up to 20 percent and beginning to process of diluting its current 20 percent stockpiles down to lower safer levels well below what's needed for a nuclear weapon.

So, you had remarkable scenes today of U.N. nuclear inspectors disconnecting uranium enrichment centrifuge cascades, for instance, Iran's Natanz Plant, and word the IAEA will double the size of its inspection team in Iran as they go to more sites, more often, including sites, Wolf, in the past that have been secret.

BLITZER: Tell our viewers, Jim, what is Iran getting in return?

SCIUTTO: Well, the first rounds of their sanctions relief kicked in this morning. That means lifting embargoes on things like auto parts, petrochemical exports, and airplane parts. That's actually a big deal in Iran because there are real concerns there about the state of its aging aircraft fleet, and then over the coming weeks and months, if Iran keeps to the terms of the deal, it will receive about half a billion dollars every three of four weeks in unfrozen overseas assets, the total about $4 billion at the end of the six months.

BLITZER: As you know, there are plenty of Republicans in the Senate and the House, even some Democrats who disagree with the president. The Israelis, the Saudis, they are all worried of a flood of new trade rushing in to Iran to boost Iran's capabilities. What are U.S. officials saying?

SCIUTTO: Well, U.S. officials say simply no. They say that the broader sanctions regime stays in effect and that business men are subject to the same penalties today as they were yesterday for doing business in restricted sectors, such as oil. U.S. official put it to me simply saying Iran is not opened for business. They're only open for business in effect in these very defined areas that came under this interim deal like the auto parts, like the airplane parts, et cetera.

BLITZER: We'll see what happens over this next six months. Jim Sciutto reporting for us, thank you.

When we come back, the New Jersey governor, Chris Christie's political troubles may be multiplying, but he isn't backing away from talk in 2016. You're going to find out what he's now saying in a new interview.

Plus, President Obama is honoring Dr. Martin Luther King Jr. today speaking openly and candidly about his own race in a new interview. Stay with us. You'll get details right here in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's get back to our top story right now. The widening scandal surrounding the New Jersey governor, Chris Christie. The latest involving his lieutenant governor, Kim Guadagno, who's firing back today against an allegation made by the Hoboken mayor, Dawn Zimmer, that she played politics with the superstorm Sandy funds and threatened to withhold that money as retribution. So, which side is right in all of this?

Chris Frates of CNN investigations has been looking into the money, chasing the money, if you will. What are you finding out, Chris?

CHRIS FRATES, CNN INVESTIGATIVE CORRESPONDENT: Well, I tell you what, Wolf, when you have a disaster that's as massive as Sandy, there are a lot of moving parts to the relief. In this case, there are at least ten different agencies handling the rebuilding effort, and so, the governor claims that Hoboken got $70 million. And that's correct. But it was all federal money and more than half of it was flood insurance and that was where people were collecting on their FEMA insurance plans.

Now, the mayor says her city only received $342,000, but that's also correct. It came from a pot of money that the governor's office had more control over. But the governor's office points out that more funding is going to be coming to New Jersey.

BLITZER: So, Chris, what about other towns and cities in New Jersey, some comparison?

FRATES: Well, it's a good point, Wolf. And the governor's office says that Hoboken is not trailing behind other cities in similar size. And CNN has spoken to about half a dozen democratic mayors from hard- hit Sandy zones, and most of those folks have told me that they never felt threatened by the governor.

Now, one of those mayors, Steve Fulop, of Jersey City, said a full day of meetings with state officials were abruptly canceled an hour after he announced he wasn't endorsing the governor. So, at least, one mayor saying there was some retribution.

Let's discuss all of this with our chief national correspondent, John King, CNN commentator, Ryan Lizza. He's the Washington correspondent for the "New Yorker" magazine, also CNN commentator, the Republican strategist, Ana Navarro. She was with Governor Christie in Florida this weekend, even had some advice for him.

We're going to get to that in a moment, Ana. But John, first, his troubles are clearly multiplying right now, different fronts in this investigation. Local, state, federal authorities, they're looking into a lot. How much trouble is he in?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, if these allegations are proved to be true, especially what the mayor of Hoboken is saying, he's in a lot of trouble because that would be essentially a quid pro quo. If you want your Sandy aid, you have to support the governor over here, that would be an abuse of power. Now, he says it's flatly not true. The lieutenant governor came out today and says it's flatly not true.

The mayor says she know (ph) with the U.S. attorney's office. We're going to have to see where the facts go here.

One of the things that the Christie camp does say, Wolf, is she was up for re-election last year, never mentioned this during the campaign, didn't give this information to Christie's opponent in the last campaign, never reached out to the state assembly controlled by Democrats, never sent a letter to any Democrats in Congress who would have no problem getting in Chris Christie's face if these were true. So, the Christie camp is saying why now? Why now? Why is this only coming out now? However, it's a serious allegation and it is proof of nothing else that Chris Christie is going to face months of this -- state assembly investigations, plus the U.S. attorney's office and on.

BLITZER: She says she didn't raise this -- didn't release all of this information because she was afraid no one would believe her if she did. That's her excuse right now.

RYAN LIZZA, THE NEW YORKER: Yes.

BLITZER: If this latest, though, allegation -- Ryan, correct me if I'm wrong -- you think could be potentially more serious than the original bridge allegations?

LIZZA: Well, Wolf, substantively and politically, this is a direct shot to the whole of Christie's political ambitions. One, as John points out, I think a lot of lawyers and criminal attorneys have struggled to point to a crime that could have been committed with this crazy bridge situation, although the people have pointed to some things. It's not clear that even if Christie knew that there was any crime committed, this is, as John said, is quid pro quo. This is saying that we're not going to give you your Sandy money unless you move forward on a development project that she alleges benefits of one of Christie's political aides. That's criminal if that's the case.

BLITZER: If that's the case.

LIZZA: And, politically, look, the whole aura of Christie's inevitability in going into the 2016 presidential campaign was about Sandy, was about turning the story of New Jersey, you know, overcoming adversity and fairly distributing these funds. So, if there's any kind of shenanigans going on with Sandy financing, that is a huge, huge political hit.

BLITZER: Yes, Ana, I know you spent time with Chris Christie down in Florida this weekend. But let me show some poll numbers and our viewers as well. These are Pew poll numbers, opinion of Chris Christie, these numbers were done before the Hoboken allegations came up.

Back in January a year ago, 2013, his favorable number was at 40 percent. It's now down to 38. A year ago, his unfavorable was only 17. It's now up to 34. Unsure was 42 percent, a year ago, 28 percent right now.

Walk us through what you saw this weekend because you and I have spoken. You saw a difference between Chris Christie on Friday versus Christie on Saturday.

ANA NAVARRO, CNN POLITICAL COMMENTATOR: You know, the Chris Christie I saw on Saturday was really tired, hallow-eyed. He was just, you know, was beat down. He was tired, his hair was long. He didn't look like the Chris Christie I'm used to seeing.

I commented to him -- Chris, you look very tired. You need to get a haircut. You need to get some rest. And the next day, he showed up with a haircut and he told me, I was able to get some rest. I saw a dramatically different Chris Christie on Sunday than I did on Saturday.

Saturday's Chris Christie did not touch the bridge issue. All of those events on Saturday were for the governor of Florida and for the Republican Governors Association. So, it was right for him to put the focus on that.

Sunday's events were for Chris Christie and he himself brought up the bridge issue. He himself brought up what was happening in New Jersey and he brought it up in a way saying, you know, the last 11 days have been very tough for me. I have not enjoyed the last 11 days. No sane person would.

I am being tested and life presents challenges. Everybody in the room knows that. The question is, how do you deal with those challenges?

I think what I saw was a man that's done some soul-searching and some self-reflection that has clearly been shaken by this, but I think it's premature to count the man out. He may be down but he's not out.

And I think from the donors, what I saw is a wait and see mode. My big takeaway from this weekend was that he has put 2016 on pause, which is a very smart thing to do. He needs to get his ship in New Jersey straightened out before thinking of national elections. But he did say on the national front, if I ever put myself up for national office, everyone has a right to see, has an absolute right to know how I would deal with problems and you're getting to see it now.

BLITZER: Speaking of 2016, John, he gave an interview on Friday to Yahoo.com. He said, "I think I'm a fairly good politician. I think it's most likely that the next Republican nominee for president would be a governor. I'm readier, if that's a word."

KING: If that's a word. Look, if you go back to time, Ronald Reagan, Bill Clinton, George W. Bush, traditionally, governors are the candidates for president. And a lot of Republicans now, when they look at the class of senators, sure, there's Ted Cruz, there's Rand Paul, there's Marco Rubio, they think, well, one of our criticisms of President Obama is he wasn't ready. He's a freshman senator who then immediately run for president. Wouldn't we be stronger to have a second term or a third term governor our there?

So, right now, Chris Christie owns that stage. Scott Walker, Wisconsin, up for re-election this year, if he wins, you might see him out there. John Kasich of Ohio, you might see him out there.

So, Chris Christie may not be -- Rick Perry, the former governor of Texas, says he may go at it again. But in that -- to Ana's point about the pause, no strategist running away, Chris Christie right now is the only one I'll call mainstream conservative to many donors. They're worried about the Tea Party ties of those other senators I just mentioned. Jeb Bush still thinking about it.

So, some of them are paused because they don't see another horse just yet, but they'll look if they have to. BLITZER: Bobby Jindal, he's thinking about it, I suspect as well. You know, these investigations -- we covered a lot of them -- they start out relatively modest and but then they seem to escalate, making go on not just for weeks or months, but potentially for years.

LIZZA: I mean, it reminds you of the independent counsel investigations against Bill Clinton in the '90s, right, which started over a real estate deal with Whitewater. And by the time, he was impeached, it was over Monica Lewinsky.

Remember, this is not just one investigation. You have both chambers in the legislature of New Jersey doing separate investigations. You have the U.S. attorney doing an investigation. You have the I.G., people forget about this, the I.G. of the Port Authority is also doing their own investigation.

BLITZER: The inspector general.

LIZZA: Inspector general.

And so, every time there's a new allegation, the Democrats leading the investigation of New Jersey put out a statement saying, we're going to look at this, too.

NAVARRO: Wolf, I think the point John touched is very accurate. What this has done on the Republican field has bought time. It has bought other potential candidates, time to make a decision.

There was a lot of momentum from the Christie camp and I was feeling like a lot of donors, a lot of lean Republicans were getting ready to sign up with him. Right now, we are in a wait and see mode. Donors are in a wait and see mode.

There's going to be about a year's time. We're all going to have to take a deep breath, maybe pick up a hobby or something, because it's going to be nine, ten months before everybody knows after November what is happening on the Republican field. BLITZER: Good advice. Ana, don't go away. We've got more to discuss, Ryan and John are staying with us as well.

Up next, President Obama opening up rather dramatically in a brand new interview in the "New Yorker" magazine, speaking candidly about race and much more. Wait until you hear what he has to say.

And it's no longer just say no. Stand by for the president's new comments on marijuana.

(COMMERCIAL BREAK)

BLITZER: New pictures of President Obama, the first family, marking this Dr. Martin Luther King Jr. holiday by participating in a service project here in the nation's capital.

It all comes amid new political buzz about a new interview he granted to the New Yorker magazine which he spoke candidly about race, among other key issues. Let's bring in our senior Washington correspondent Joe Johns. He's got the details.

Pretty revealing stuff, Joe.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: That's true, Wolf.

It's not just the King holiday. It's also his fifth anniversary in the office and it maybe remembered as a time when President Obama who was known for no drama, opened up about his life in office to an award-winning writer and editor.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It looks like we have lamb here.

JOHNS (voice-over): At a food bank in the nation's capital, the president and family mark the King holiday with an act of service.

OBAMA: We are noting the 25 anniversary of this outstanding institution, and very proud to be a part of this.

JOHNS: This brief remarks nearly drowned out by the buzz of a lengthy article published in this week's "New Yorker" magazine, in which President Obama blames in part his sinking poll numbers now at all time lows on skin color, telling editor David Remnick, "There's no doubt that some folks really dislike me because they don't like the idea of a black president."

In the interview, the president, who does not often discuss issues of race, appeared conflicted, suggesting he may get a pass from Americans because he's black. "The flip side, there are some black folks and maybe some white folks who really like me and give me the benefit of the doubt precisely because I'm a black president."

JULIAN ZELIZER, PRINCETON UNIVERSITY: He's expressing some of his frustrations and arguments about why he hasn't been able to accomplish everything that some of his supporters have hope for and to respond to critics by saying he's not the caricature that they often paint, being some far left socialist.

JOHNSON: The wide-ranging article conducted during a series of interviews this fall shows the president's evolving position on the country's political divisions, the candidate who once said this --

OBAMA: There is not a liberal America and a conservative America. There is the United States of America.

JOHNS: Now, a president seemingly at peace with the limitations of office, telling "The New Yorker," "At the end of the day, we are part of a long-running story. We just try to get our paragraphs right."

ZELIZER: If you listen to all his comments and hear about what's going on in the White House, that's not the same Barack Obama anymore. JOHNS: The president's balancing act continues when he turns to the question of legalizing marijuana saying, "I don't think it is more dangerous than alcohol."

But despite his own well-documented history with marijuana, he goes on to call it a bad idea, a waste of time, not very healthy.

(END VIDEOTAPE)

JOHNS: President Obama reiterated in these interviews that if he achieves anything in the next three years, he wants it to be about addressing economic inequality and expanding the middle class -- Wolf.

BLITZER: Good report for that amazing interview in "The New Yorker", as well. Joe Johns, thank you very much.

Let's bring back our panel, John King, Ryan Lizza, and Ana Navarro.

Ana, on this marijuana issue, the president also raised the notion that some groups in America were punished more for use of -- a lot of illegal use of marijuana than others. Middle class kids, he said, don't get locked up for smoking pot and poor kids do, and African- American kids and Latino kids are more likely to be poor and less likely to have the resources and the support to avoid unduly harsh penalties.

Do you agree with the president on this?

NAVARRO: You know, it's been a big concern of the Hispanic community, a big concern I think of the African-American community as well, something that we share.

But I think there's still a lot of people in both communities, certainly in the Hispanic community, that see marijuana as a dangerous drug, as a gateway drug. I'm not sure I agree. I certainly don't agree that it's the same as alcohol.

I think that, look, Wolf, those of us who like booze, we like booze and that's all we drink and we stay drinking booze. We don't go from booze to other things. Whereas, marijuana, there is this fear that it is this gateway drug.

On the pot issue, I think we've got two states that are right now Washington state and Colorado -- in fact, they're both going to the Super Bowl. We're going to have the first high Super Bowl. But, you know, they're both legal -- both those states have legalized marijuana. We're going to see what the experiment looks like and we're going to see what the effects, negative or positive, are.

BLITZER: You know, John, the president was pretty candid in discussing marijuana. It's a sensitive issue. Were you surprised?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It wasn't all that long ago, remember, his Justice Department was voicing frustration with these state efforts, saying they were counter to federal laws. So now you have the president of the United States essentially saying well, let's see how these experiments play out. I don't see this any worse than alcohol. Pretty clear signal there from the president of the United States.

I thought it was a very candid interview both on that issue, on the race issue and on this -- he seems more humbled by the office, if you will. Remember in 2008, he was the transformational, aspirational candidate, he was going to change everything in Washington. And now he's writing his one paragraph.

Very telling about the toll of five years in this very partisan town.

RYAN LIZZA, CNN POLITICAL COMMENTATOR: Yes.

BLITZER: What was your take away -- and you write for "The New Yorker," even though that was not your interview.

LIZZA: Yes. This was obviously done by David Remnick, my boss and the editor of the magazine. I -- my takeaway was very similar to what Joe said and what you said. That this is -- this is a second-term president. This is a conversation by a second-term president. One, who is emphasizing the constraints on the office.

Remember, his famous speech in 2004 was about how he's uniquely suited to overcome the divisions in this country. And now after five years he's basically saying the country is divided, you can only get so much through this paralyzed system in Washington, I'm no more able to do that than anyone else.

I found it very -- I found President Obama humbled in this interview.

BLITZER: Yes.

LIZZA: I found him emphasizing what he cannot get done. I don't want to say --

(LAUGHTER)

But after I read it I called my editor David and said, you know, Obama, he seems like a little bit of a bummer in these interviews. It just -- he did not have that inspirational quality.

BLITZER: Were you surprised that David Remnick got so much exclusive access to the president? Because the president, he gives interviews, he has news conferences, but this was pretty extraordinary.

LIZZA: Well, David is one of the best journalists in this country and --

BLITZER: He's your boss.

(CROSSTALK)

LIZZA: I'm not just saying that because he's my boss but --

KING: You bonus isn't --

(LAUGHTER)

LIZZA: I would say that -- I would say that even if he wasn't my boss so no, it didn't surprise me.

BLITZER: And he wrote a book --

KING: Wrote a wonderful -- yes.

BLITZER: About the president as well.

(CROSSTALK)

NAVARRO: But, you know, Wolf, those --

BLITZER: Very Quickly.

LIZZA: It's really hard to say anything new about Obama --

NAVARRO: Those images you just showed --

LIZZA: He's managed to do it.

BLITZER: Yes. Go ahead, Ana.

NAVARRO: Those images you just showed of President Obama, the Obama of the 2004 Democrat convention, and the Obama today, that tells you the great difference. Look at how much he has aged between the inspirational, the youthful, the idealistic Obama, and the guy who's had to govern for five years. His head has gone gray.

BLITZER: And he is a lot more humble right now than he was then.

All right, guys, thanks very, very much.

Just ahead, new allegations that Chris Christie's administration threatened to withhold Sandy relief funds if it didn't get what it wanted.

I'll talk to the New Jersey State Assembly's deputy speaker about whether or not they are true.

Plus, more than a year after his arrest, what could be a promising new sign that the American detainee Kenneth Bae might soon be released from North Korea.

And a dangerous new threat from Russia's so-called black widow terrorist, just three weeks ahead of the winter games.

(COMMERCIAL BREAK)

BLITZER: There is some encouraging new signs that the last American detainee held in North Korea may finally be coming home. A newly released tape statement shows Kenneth Bae, the 45-year-old missionary, held for over a year confessing to what's described as a serious crime. But some say that's actually a good thing.

Brian Todd is here in the SITUATION ROOM to explain.

What you are learning?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, you know, Kenneth Bae's family was looking for any sign of how he's doing physically because they say he's been very sick. And despite the fact that it looks disturbing on the surface, as Wolf mentioned, there is hope that this videos follows a pattern of others before it.

(BEGIN VIDEOTAPE)

TODD (voice-over): This is the first glimpse of Kenneth Bae the world has gotten in several months, paraded before the cameras in a gray prison jumpsuit and cap. During his brief appearance, the American, now held for more than a year in North Korea, read a statement saying in part he committed a serious crime against that country's government and that North Korea doesn't abuse human rights. He also appeals for mercy.

KENNETH BAE, AMERICAN IMPRISONED IN NORTH KOREA (Through Translator): I want to be pardoned by the North as soon as possible and return to my beloved family. For that I ask the U.S. government, press and my family to make more active efforts and pay more attention.

TODD: The video, which at first seemed shocking, may actually be a positive development. North Korea has a history of extracting false confessions out of its captives before releasing them. Analysts say this is likely one of them.

ALEXANDRE MANSOUROV, U.S.-KOREA INSTITUTE AT SAIS: This could be an early sign that the North Koreans are laying the groundwork for the eventual pardon and release of Kenneth Bae.

TODD: Experts point to the recent case of American Merrill Newman held for several weeks in North Korea. He confessed on state television to conducting espionage against Pyongyang during the Korean War.

MERRILL NEWMAN, IMPRISONED IN NORTH KOREA: Collected information of the KPA and attacked communication system.

TODD: Newman was released about a week later. Once he got home, he disavowed most of his confession.

Bae was arrested in November, 2012 for allegedly trying to topple the North Korean regime. His family says he was working toward spreading Christianity there, which the North Koreans saw as a threat.

Bae's mother, who recently visited him, says he suffers from diabetes, an enlarged heart and other ailments. Analysts say the North Koreans don't want an American to die in their custody.

PROF. HAN PARK, UNIVERSITY OF GEORGIA: I think North Korea has used up the utility of this man. This is a lesson in future missionary type of people will be -- will be thinking twice before going in there for the same purpose. TODD: And on the heels of Dennis Rodman's disastrous visit to the country, which was largely panned in the U.S., and the intrigue involving the execution of his uncle, some believe the release of Bae may be a signal to the international community by the country's mysterious leader, Kim Jong-Un.

MANSOUROV: To improve the image of the regime after the execution of Jang Song Thaek, probably, also the young leader wants to show that he can resolve important international issues, even without adult supervision.

(END VIDEOTAPE)

TODD: Now on the Kenneth Bae video, an administration official tells us they hope this signals North Korea's willingness to release him. The official says the administration has offered to send Ambassador Robert King, the special U.S. envoy for human rights, to Pyongyang to secure Bae's release and they are waiting for the North Koreans' response -- Wolf.

BLITZER: If that were to happen, it could be a catalyst for even more positive contact potentially.

TODD: That's right. You know, analysts say North Korea could be looking at this and looking also at Iran's negotiations with the United States and hoping for a similar opening. This could be a way to reopen the dialogue over North Korea's nuclear program which of course is further along than Iran's.

BLITZER: Yes, it is. All right, Brian, thanks very much. Let's hope Kenneth Bae is out and out soon.

Coming up, a building collapse in the heartland and a desperate search for survivors.

And is a black widow terrorist, as she's called, stalking the Winter Olympic Games upcoming in three weeks? We're going to talk about the dragnet that's under way right now and the danger to Americans and other foreigners who are heading to Russia.

(COMMERCIAL BREAK)

BLITZER: Let's quickly get to some other stories developing this hour.

A district attorney says at least two people are dead after a building collapsed in Omaha, Nebraska, this morning. There have been 10 people hospitalized, many are unaccounted for.

The building was part of an industrial plant that produces feed and other products for livestock. Officials are investigating the cause, as rescuers continue to search for survivors.

If you live on the East Coast, expect some brutally cold temperatures, some serious snowfall tomorrow. A winter storm system will move through the mid-Atlantic states into the northeast tomorrow into Wednesday, dropping anywhere from three to 10 inches of snow.

Check out this amazing new video from Indonesia. Ash clouds are consuming the skies over Sumatra after an active volcanic eruption intensified today. The mountain has erupted hundreds of times in the past few weeks. 22,000 people have been displaced as clouds of hot gases and rock fragments have spewed down the slope and into towns and cities.

Happening now, hunt for a black widow. We have new information about a possible female bomber who may be on the ground in Russia right now preparing to attack the Winter Olympic Games. We're following all of the Olympic terror threats and new moves by the U.S. military to be prepared for the worst.